A program designed to help small businesses owned by military veterans where were injured when serving their country is riddled with fraud and abuse, says the Government Accounting Office.

Millions of dollars in federal contracts meant for the small businesses through the Service-Disabled Veteran-Owned Small Business Program have gone instead to foreign companies and other firms that should not have gotten the federal contracts, the GAO says in a new report.

(Download a copy of the report by clicking on the link below.)

In one case, the GAO investigators found $5 million in a contract for construction and janitorial services going to a firm that “utilizes employees from a large non-SDVOSB foreign-based corporation, which reported almost $12 billion in annual revenue in 2008, to perform contracts.”

Cheaters get away with it without fear of consequences, the report suggests.

“Although ineligible firms have been identified through bid protests, firms found ineligible do not face real consequences, can be allowed to complete the contracts received, and are not suspended or debarred,” the GAO report says.

It’s just another example of unchecked fraud, says a critic of the SBA, the American Small Business League of Petaluma.

“Since 2002, there have been more than 24 other federal investigations, which have found fraud, abuse, loopholes and a lack of oversight in small business contracting programs under various federal agencies,” the ASBL says.